Channelnomics Original

While partners bristle at plans, Microsoft says change part of broader shift

Channelnomics Staff

The days of free internal use rights (IUR) to Microsoft software are coming to an end for partners as Microsoft quietly announced last week that it’s phasing out the benefit to partners as part of a broader shift in its go-to-market strategy. Additionally, Microsoft is changing access to technical support through its Microsoft Action Pack (MAP) and competencies.

The Lowdown: The change means that Gold and Silver partners will no longer receive access to free software licenses, whether for desktops, servers, or cloud-based resources. The free software is one of the most popular compensation benefits among Microsoft partners, and one of the drivers behind partners buying into the MAP and attaining Gold and Silver status. Microsoft isn’t offering specific details on why it’s changing the policy and benefit, saying only that the move is part of a shift in market conditions and its go-to-market strategy. In a statement to Redmond Channel Partner, Microsoft did point to a blog published in May that outlined its future partner and channel strategies.

The Details: On the first day of its fiscal year (July 1), Microsoft announced the change, which will grant partners free-use rights to software for demonstration and development purposes only. The changes will take full effect on July 1, 2020. Additionally, beginning this August, Microsoft will discontinue product support for on-premises software previously available through MAP and earned competencies. And starting Oct. 1, 2019, product licenses obtained through specific competencies will apply only to those competencies.

The Impact: Partners are buzzing with disbelief and agitation over the changes in Microsoft policy. In social media posts, partners are saying the changes reflect a deterioration in the Microsoft Partner Network program. Some prominent partners are going as far as to say that the new policy shows that the Microsoft partner program is in chaos. Still, some partners see it as a logical move by Microsoft to decrease the number of on-premises licenses in use and shift activity to cloud-based products. Many people anticipate the new policy will be a hot topic between partners and Microsoft executives at the upcoming Inspire conference in Las Vegas.

Adam Bulgatz of AJB Digital in Huntsville, Alabama, started a petition through Change.org to compel Microsoft to reverse its IUR policy decision. So far, hundreds of Microsoft partners have signed the digital protest document.

The Buzz: “The transformation enabled by cloud computing has wide-ranging impacts, including how we work with partners,” Microsoft said in a statement to Redmond Channel Partner. “To help partners capitalize on the opportunities possible with cloud, we are refocusing our partner business investments and programs.”

“This must be the worst move by Microsoft in 30 years and may see the end of the MPN program as we know it today. A very sad day,” wrote Kelvin Kirby, the former president of the International Association of Microsoft Channel Partners (IAMCP), in a Facebook post. “I hear on the partner grapevine that there is uproar in the MPN community about this. Not at all unsurprising. Will be interested to see how Microsoft survives Inspire after this rather critical announcement.”

“The move to cut back on product use rights reminds me of a similar move Microsoft made in 2013 when it eliminated TechNet subscriptions, which provided many with a relatively cheap way to get access to many Microsoft products and services,” wrote Mary Jo Foley, author of the blog “All About Microsoft” for ZDNet. “At that time, Microsoft was guiding those affected to purchase paid MSDN subscriptions and/or use evaluation copies of software, which are free for a limited period of time.”

Channelnomics Point of View: Microsoft discontinuing internal use rights for partners is not surprising, but not for the reason many partners think. The online forums are replete with partners who think this is about Microsoft wanting to force more license sales and shift more business to cloud subscriptions.

In reality, Microsoft is clearly signaling that it’s less interested in reseller partners and more interested in integrators and independent software vendors. Microsoft’s Toby Richards, general manager of Partner Go-to-Market and Programs for One Commercial Partner, clearly stated Microsoft’s focus and aspirations in a POD2112 episode earlier this year.

At the Inspire conference, watch for Microsoft to announce a significant jump in its revenue from the co-selling program, in which it resells products produced by partners that complement its cloud services. The elimination of the IUR program makes more sense when seen through the ISV lens and not the reseller’s perspective.